For all the wrong reasons, the term “fiscal stimulus” became a dirty word in the wake of the Great Recession. Policymakers need to work hard to counter that perception before the next downturn hits.
President Barack Obama’s $800 billion spending plan is often criticized as having been ineffective. In reality, the plan played a crucial role in stemming a deepening economic slump, and if it fell short, it was because the aggressive one-time boost ultimately proved too small to counter the magnitude of the shocks at hand.
“Even actions like extending unemployment insurance during a long downturn are now highly controversial,” Romer said. “It’s truly frightening.” [Source]
Those who are looking forward to the next recession and who are opposed to using fiscal stimulus to end it are those who want to continually reduce the role of government so that they can increase privatization to further enrich themselves at everyone else’s expense.
Fiscal stimulus is exactly the best method for ending a deflationary recession. To top it off, we don’t even have to issue bonds/debt to vastly increase fiscal spending.